Betsi Fores

Don’t judge a book by its title, the saying goes. Perhaps the same adage should be applied to federal legislation.

Under the Affordable Care Act, medical claim costs, the largest driver of health insurance premiums, are expected to increase by 32 percent for individuals, a new study by the Society of Actuaries finds.

Though some states might see declines in cost-per-person medical claims, the report found “the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers,” The Associated Press reports.

The disparity of the increase between states is stark.

California’s claim costs are estimated to increase by 62 percent by 2017. In Ohio, it’s expected to be 80 percent. Florida costs are expected to grow 20 percent and in Maryland, 67 percent. The higher claim costs are related to the increase in sick people expected to join the pool, according to the report.

The Obama administration counters only focuses on one piece of the law, the AP reports, and ignores other cost-relief instruments it contains, such as tax credits to make premiums more affordable and subsidies to insurers who cover a large portion of the sick, and questions the design of the study.

Recently retired Medicare chief actuary Rick Foster, however, says the report does “a credible job” estimating enrollment and costs under the new law, “without trying to tilt the answers in any particular direction.”

“Having said that,” Foster added, “actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully.”

Actuaries use statistics and economics to estimate financial risk and uncertainty.

One of the actuaries who worked on the study, Kristi Bohn, said that the study did not attempt to include the effects of subsidies and other factors that might reduce cost increases.

The goal of the study was to look at the underlying cost of medical care, she said, with claims costs being the most important driver of health care premiums.

“We don’t see ourselves as a political organization,” Bohn added. “We are trying to figure out what the situation at hand is.”

Perhaps the positive news is that the new health care system is expected to cover more than 32 million currently uninsured Americans once fully rolled out, and will bring down costs for the individual market in some state more than double digits. Those states include New York and Massachusetts.

The report only addressed the individual market, and not employer plans which are the mainstay for most workers and their families, mostly because the new law is not expected to have a huge impact on these premium.

There is a wide disparity among the states because of their different demographics, population sizes and insurance rules. “In the relatively small number of states where insurers were already restricted from charging higher rates to older, sicker people, the cost impact is less,” AP notes.

“States are starting from different starting points, and they are all getting closer to one another,” Bohn said.

The study also does not address the inconsistencies of some states accepting federal subsidies to expand their Medicaid programs while others have not. The study presented its estimates under the hypothetical scenarios where all states agreed to the Medicaid expansion or none did.

Insurance expert with the Kaiser Family Foundation, Larry Levitt, reviewed the report and concluded that a few more questions need to be answered.

“I’d generally characterize it as providing useful background information, but I don’t think it’s complete enough to be treated as a projection,” Levitt said, dismissing the notion that employers with sicker workers would drop coverage as “speculative.”

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